Why Sexy Citibank Ex-Employee Can't Sue

June 4, 2010

By ALICE GOMSTYN ABC NEWS Business Unit

When Debrahlee Lorenzana tried suing Citibank for gender discrimination, she and her lawyer met with an unwelcome surprise: They learned that when Lorenzana started at Citi, the employment documents she signed included one stipulating that any employment disputes be resolved through arbitration, not in court.

It's the kind of case that's prompted provocative headlines across the country: A beautiful woman, Debrahlee Lorenzana, is claiming that one of the country's biggest banks, Citigroup, fired her for being too attractive.

In a lawsuit, Lorenzana, who worked at a Citibank branch in New York, also alleges that she wasn't allowed to wear clothing similar to that of her female co-workers because her figure made wearing such attire "too distracting" to her male colleagues.

Citi has said the lawsuit is "without merit," that it would mount a "vigorous" defense and that Citi "is committed to fostering a culture of inclusion and providing a respectful environment in the workplace."

Buried beneath the attention-grabbing allegations, meanwhile, is a legal detail that means a lot for many workers, not just the attractive ones: Thanks to something known as a mandatory arbitration clause, Lorenzana likely will not have her day in court.

Woman says Citibank fired her because she is too pretty

When she first began work at Citi in September 2008, the employment documents she signed included one stipulating that any employment disputes be resolved through arbitration, not in court.

Companies have increasingly begun mandating that employment disputes be resolved through arbitration. An alternative to litigation, arbitration allows for disputes to be decided by a third party, known as an arbitrator, instead of a court.

In arbitration, as in court hearings, witnesses still make depositions and evidence is still presented by both sides, but the process is less formal than a trial and is held in a private setting. That means, some legal experts say, that it can be concluded more quickly and cheaply than a trial.

Some arbitration advocates argue that, by virtue of their experience, arbitrators are more likely to issue fairer, more just decisions than juries.

But Lorenzana's lawyer, Jack Tuckner, said he and his client would have preferred a jury trial. For one thing, he said, arbitrators -- sometimes former judges or lawyers -- may be more jaded and conservative than a jury. He also questioned whether arbitrators, who often are paid by the companies requiring arbitration, are ever truly impartial.

Jurors, he said, "come from all walks of life" and are therefore "better equipped at determining the facts" -- including what monetary damages, if any, should be awarded.

"A jury will act [more] with their heart and their emotions than an arbitrator ever will," he said. "You're far less likely to ever see a penny of punitive [damages] with an arbitrator."

A 'Watershed' for Mandatory Arbitration

The fact that Lorenzana essentially signed away her right to sue in court didn't come to Tuckner's attention until after they filed a lawsuit against Citi.

"She had no idea that she was signing into that when she took her job," he said. It's the type of agreement, he said, that many employees will sign without a second thought as part of the flood of paperwork that comes with a new job.

While labor unions typically negotiate arbitration standards as part of their contracts, the use of mandatory arbitration to resolve disputes between a company and a nonunion employee was pioneered by Wall Street.